Striking a balance with our finances is a constant juggling act that requires discipline and frequently reviewing the way we spend our money. Being aware of bad money habits is crucial. Here are four money habits that we all need to leave in 2020.
Comparison is a thief of joy
Your financial situation is different from the next persons, so why compare your financial journey? Being honest about where you are in terms of your finances can make the journey to creating realistic financial expectations manageable. You may need to enlist the help of a financial advisor to help you create attainable financial goals. Always remember that your path is different. Therefore, what may work for one person may not necessarily work for you.
Not being mindful of what is spent
Debt is a problem that plagues South Africans, with many people using 63% of their salary to service debt. Not being able to prioritise the paying off of debt and managing daily expenses can push many people into the red.
Keeping track of your finances starts with small things such as:
It will require great discipline and setting a budget to achieve this goal. But once you start, it will be easier to adapt your finances to something that is sustainable in the long term.
Not putting money aside for emergency savings
With so many financial responsibilities to juggle, saving can appear to be another financial burden. However, not saving can leave you exposed. More so, when you have an emergency pop up, it can cause people to dip into savings.
When setting up a financial buffer in the form of an emergency savings account, keep in mind to set an amount that you will be able to sustain every month. The aim is not to put away large amounts, but what is affordable. You will soon find out that it can come in handy when you need it the most.
Not using your credit card to compliment your budget
There is such a thing as good credit and bad credit. Knowing how to use your credit card to supplement your budget should be a set goal. A common mistake is when people end up spending more than they earn, which can create problems.
Aim to use your card to compliment your budget by using it for expenses that have been included in your budget. A general rule of thumb is to stick to spending 25% - 50% of the credit that is offered to you.
Always try to pay your credit card in full to avoid accumulating interest charges that can be harder to pay off. Remember to pay off what you owe before using more to keep control of your credit card.